Contract Wins

RNS Number : 4480X

Active Energy Group PLC

13 January 2014

 



13 January 2014

Active Energy Group Plc
("Active Energy Group" or the "Company" or "AEG")

Major New Supply Contracts and Shipping Arrangements

Active Energy Group, the pan-European supplier of high-quality wood chip and associated timber products for green energy Biomass power generation and MDF manufacturing, announces that it has secured significant new contracts to supply two leading Turkish MDF manufacturers with its high-grade MDF-quality wood chip

Under these contracts, Active Energy Group has agreed to supply approximately 228,000 metric tonnes of high grade MDF quality wood chip over the next 12 months, generating additional revenues for the Company of approximately US$24 million in FY2014.  This is in addition to the previously announced (RNS dated 14 August 2013) contract with Biomasse Italia SpA to supply a minimum of 240,000 metric tonnes of wood chip for Biomass fuel, 160,000 metric tonnes of which is expected to be delivered in 2014.

The first delivery of more than 14,500 tonnes of wood chip to satisfy the new Turkish supply contracts left AEG's Ukraine Black Sea port facilities on 5^th January 2014 on the MV Sider King, which the Company has secured under an exclusive time charter arrangement for the whole of 2014.  MV Sider King will service clients in both Turkey and Italy on a constant basis. To supplement this fixed price shipping capacity, AEG is currently negotiating time charter agreements on a further two bulk carrier vessels, removing the uncertainties associated with its previous spot charter arrangements.

As a result of these substantial new contract wins, Active Energy Group has made significant inroads towards meeting the forecasted volumes of Black Sea shipments for 2015 as indicated in the Company's Shareholder Circular dated 4^th June 2013, when the Company sought shareholder approval to acquire its now principal trading partner, Nikofeso Holdings Limited. Discussions with other major Turkish producers are at an advanced stage and the Company is confident of making additional announcements of further contract wins in the near future.

Richard Spinks, Active Energy Group CEO, commented: "Demand for wood chip continues to exceed supply and the securing of these two new supply contracts is an important step in fulfilling the potential of this vibrant and expanding business. Fixed price shipping capacity and negotiations on a further two charter vessels will only continue to strengthen the logistics activities of AEG.  The Company will continue to focus on its aim of becoming the major European supplier of wood chip for Biomass fuel and MDF manufacturing, and I believe that the management team  has the operational and logistical expertise to make that happen in a timely manner."

Enquiries:

Active Energy Group plc
Richard Spinks, Chief Executive Officer                                 Tel: [phone]

WH Ireland (Nominated Adviser and Broker)       
Chris Fielding                                                                          Tel: [phone]

Novella Communications
Tim Robertson / Ben Heath                                                    Tel: [phone]

About Active Energy Group:

·   Company website: www.active-energy.com

·   Active Energy Group plc, a London Stock Exchange-listed company (AIM: AEG), is a
pan-European supplier of high quality woodchip and associated timber products for
green energy Biomass power generation and MDF manufacturing.

·   The company is led by a highly experienced and dedicated management team with a proven track record of working in the regions in which its operations are based.

·   In June 2013, Active Energy Group acquired its major trading partner and raised in excess of £3m to facilitate future growth and expansion of its production and shipping facilities.

·   Ukraine, with its large forestry reserves and comprehensive road, rail and sea transport links, is an ideal location from which to source raw timber and supply European Biomass energy producers and MDF manufacturers.

·   Turkish MDF Market:

o Turkey is the leading producer of MDF in Europe, producing an estimated 4.3 million m³ in 2012, in six plants around the country.

o Currently, approximately 69% of the woodchips imported in the Atlantic region from overseas went to Turkey; all of this volume was for production of wood-based panels, primarily MDF.  AEG has now developed relationships with all of the major players in the Turkish MDF market-place

o By contrast, high-quality woodchip from AEG's ports in the Ukraine can be transported in approximately one-tenth of the time required for the US, Canadian and Latin American supply chain, representing cost-savings, client-side cashflow advantages and considerably fresher and better quality product.

·   European Biomass Market:

o EU directives are greatly accelerating demand for Biomass fuel - the European Renewable Energy Council (EREC) estimates that Biomass-based energy production will grow from 43TWh (Terawatt Hours) in 2005 to 250TWh in 2020.

o Key NGO bodies such as the European Biomass Association and Eurelectric, the European Union of the Electricity Industry, advocate establishing harmonised, binding sustainability criteria for solid Biomass.

o Bioenergy is expected to account for over 50% of EU renewable energy, according to a European Commission directive on National Renewable Energy Action Plans.

 

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